sem chap 09 the economics of supply and demand
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Sports and Entertainment Marketing Thomson/South-Western
ChapterChapterChapterChapter
The Economics of Supply
and Demand
9.1 Supply and Demand9.1 Supply and Demand
9.2 Pricing Strategies9.2 Pricing Strategies
9.3 Market Conditions9.3 Market Conditions
9
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Sports and Entertainment Marketing Thomson/South-WesternChapter 9Slide 2
Winning Strategies
Wheaties cereal discovered by accident
first featured star was fictitious Lou Gehrig was first actual star featured
many athletes make it a career goal to be
featured on the box
in 1999, women in sports were featured
Cereal Stars
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Sports and Entertainment Marketing Thomson/South-WesternChapter 9Slide 3
Lesson 9.1
Supply and Demand
Goals
Explain the relationships betweensupply, demand, and price.
Discuss the governments influence on
pricing.
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Slide 4
Terms law of demand
law of supply
scarcity equilibrium
price fixing
bait and switch price discrimination
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Slide 5
THE LAWS OF SUPPLY AND
DEMAND
demand
the relationship between the quantity of a
product that consumers are willing and
able to purchase and the price
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Slide 6
businesses that use resources to develop
products and services
supply the relationship between the quantity of a
product that producers are willing and able
to provide and the price
producers
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Slide 7
Price-Demand Relationships law of demand
an inverse relationship
when the price goes up, demand goes down
when the price goes down, demand goes up
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Slide 8
Price-Supply Relationships law of supply
when the price goes up the supply
produced goes up
when the price goes down the supply
produced goes down
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Slide 9
Scarcity scarcity
consumers have limited money to spend
producers have limited resources to use
for production
Consumers and producers must decide
how to use their limited resources tomeet unlimited wants and needs.
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Sports and Entertainment Marketing Thomson/South-WesternChapter 9
Slide 10
Equilibrium equilibrium
the point where the supply and demand
curves intersect
indicates the best quantity and price for
goods and services
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Slide 11
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Slide 12
Concerts in the Spotlight Concert prices can be set high.
limited supply
high demand
If demand is high enough, supply can
be increased by adding a second show.
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Sports and Entertainment Marketing Thomson/South-WesternChapter 9
Slide 13
How does price affect demand?
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Sports and Entertainment Marketing Thomson/South-WesternChapter 9
Slide 14
GOVERNMENT INFLUENCE ON
PRICING
private-enterprise system
based upon independent decisions made
by consumers and businesses
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Slide 15
The U.S. government has an influenceon prices charged for merchandise
directly and indirectly through antitrust
laws, taxation, and various consumerprotection laws.
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Chapter 9
Slide 16
Benefits of Competitionmonopoly
where one business controls the entire
market
Antitrust laws encourage competition
and help avoid monopolies.
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Chapter 9
Slide 17
Taxation Taxation can be used by the
government to encourage or discourage
sales.
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Chapter 9
Slide 18
Illegal Pricing price fixing
when related businesses conspire to
charge high prices
illegal in U.S.
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Chapter 9
Slide 19
when a product that is advertised at a greatprice is out of stock
salesperson tries to sell customer a higher-
priced alternative advertised prices cannot be misleading
price discrimination
occurs when one individual, group, orbusiness is charged a higher price thanothers purchasing the same product orservice
bait and switch
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Chapter 9
Slide 20
List three ways the government
influences pricing.
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Chapter 9
Slide 21
Lesson 9.2
Pricing Strategies
Goals
Discuss pricing strategies used bybusinesses to increase sales.
List five steps for determining price.
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Chapter 9
Slide 22
Terms operating expenses
markup
price lines
loss-leader pricing
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Chapter 9
Slide 23
PRICING CONSIDERATIONS price
the amount that customers pay for
products and services
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Chapter 9
Slide 24
the process of establishing andcommunicating the value of goods andservices to customers
operating expenses all the costs associated with running your
business
markup
the amount that is added to the cost of anitem to cover operating expenses and allowfor a profit
pricing
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Chapter 9
Slide 25
many companies offering the same product
customers do not recognize major differences in the
brands
the market will drive the prices low as businesses
compete for consumers business
market price
determined by laws of supply and demand
if not sufficient to cover costs and allow for a profit,
the business will cease production of the product
pure competition
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Chapter 9
Slide 26
Pricing Policies one-price policy
all customers pay the same price for a
product
flexible pricing policy
allows customers to negotiate a price
within a range
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Chapter 9
Slide 27
distinct categories of merchandise based
upon price, quality, and features
geographic pricing
allows pricing variations based upongeographic location
price lines
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Chapter 9
Slide 28
A Variety of Pricing Strategies sychological Pricing
creating an illusion for customers
Prestige Pricing
higher-than-average pricing
targets customers seeking status and
quality
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Chapter 9
Slide 29
when a supplier provides a lower price to a
customer who buys a high volume of
product
Promotional Pricing offering customers an incentive to get them
in the store
two-hour/ 50% off sale
Volume Pricing
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the willingness to take a loss on the reduced
prices of selected items in order to create
more customer traffic
special event promotion
associates a special sale with a major event
Loss-Leader Pricing
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Chapter 9
Slide 31
coupons on products that customers can mail in for
a refund
depends upon further action by the customer
multiple-unit pricing a volume based discount
trade-in allowance
giving a store your old product when purchasing a
new product usually results in a discount on the new product
purchase
rebates
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Chapter 9
Slide 32
List and describe five pricing strategies
to increase sales.
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Chapter 9
Slide 33
DETERMINING THE PRICE There are five steps to determining the
price to charge for a product or service.
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Chapter 9
Slide 34
2. Determine the cost of the product or
service.
3. Estimate consumer demand for your
product or service.
4. Study the competition.
5. Decide on a pricing strategy.
1. Establish the price objectives.
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Chapter 9
Slide 35
List the five steps for determining price.
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Chapter 9
Slide 36
Lesson 9.3
Market Conditions
Goals
Define the business cycle and describe
its impact on sports and entertainment.
Discuss the importance of monitoring
consumer trends.
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Chapter 9
Slide 37
Terms business cycle
inflation
shoulder periods
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Chapter 9
Slide 38
IMPACT OF THE BUSINESS
CYCLE business cycle (economic cycle)
the ups and downs of the economy
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Chapter 9
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Slide 40
Expansion expansion
the upside of a business cycle
peak
highest point of growth in the economy
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Chapter 9
Slide 41
Contraction contraction
the downside of a business cycle
recession or depression
inflation
when prices for goods and services rise
faster than consumer income
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Slide 42
Business Reaction trough
lowest point of contraction
recovery
economy shows signs of improving
prosperity
the period of business expansion following
recovery
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Slide 43
Seasonal Cycles For some businesses, demand
fluctuates with the seasons.
high season
the season with the highest demand
low season
the season with the lowest demand
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periods of moderate demand
Sports and entertainment marketing
strategies must be developed to help
even out the fluctuations created bychanging seasonal demands.
shoulder periods
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Chapter 9
Slide 45
What is inflation and how does itcontribute to recession?
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Slide 46
IMPACT OF CONSUMER
TRENDS Trends are dictated by
television revenue
sponsors
consumer demand
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Retro Television Retro show fans like to relive the good
old days and recall positive memories
of growing up watching the stars in thesitcoms.
Popular show reruns are inexpensive to
show on television.
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Slide 48
Game Shows
There are game show channels that
rerun old favorites.
New game shows are being produced
to meet demand.
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Audience Ratings Speak
Television networks cannot afford the
risk of having viewers switch channels
to watch a more exciting show on acompeting network.
Some series do not last more than six
airings due to flat ratings.
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Slide 50
Socio-Culture Issues
Socio-culture issues include trends in
customer attitudes
lifestyles opinions
demographics
Assessing consumers ever-changing needs
and wants is the bottom line for the successor failure of a product or service.
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Slide 51
Why must sports and entertainment
marketers pay careful attention to
consumer trends?
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Slide 52
PERFORMANCE INDICATORS
EVALUATED
Demonstrate an understanding of theeconomic challenges facing television
network programming.
Demonstrate critical thinking and problem-
solving skills.
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Describe advertisements that will attract the
attention of your target market.
Develop a strategy to encourage viewers of
the Price Is Rightto watch the bowl game.
Describe promotions appropriate for the
target market that will result in increased
ratings for the bowl game.
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THINK CRITICALLY1. How have the number of bowl games
affected the television ratings for the
games?2. Why are the scheduled date and time of
the game important factors for ratings
and promotions?
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4. How can an association be made
between the game show and the bowl
game?
3. Why should television networks pay
attention to the programming scheduled
around the game and on competing
networks when making decisions?
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